What is life insurance?

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There are many ways in which life insurance can help you provide for the future, depending which option you choose – simple term insurance or a life policy with a savings element. The latter is particular attractive to those wishing to provide for retirement as well as ensure financial security for their family.

What are the different types of life insurance?

Term life insurance in the event of death: This type of policy pays a fixed sum to the beneficiaries if the insured person dies within the insurance term. It is designed simply to provide financial security for surviving dependants. You can add cover for the risk of incapacity for work.

Term insurance for incapacity for work: If you become unable to work because of illness, the benefits paid by accident insurance and the state and occupational pensions are often not sufficient to cover your loss of earnings. Life insurance can supplement these benefits and of course also pays out in the event of incapacity to work due to an accident. You can add cover for the risk of death.

Endowment insurance: This covers the risks of death and incapacity for work but includes a savings element to build equity. When the policy matures, the policyholder receives a lump sum comprising the capital invested, any dividends and any interest accrued (insurers guarantee a minimum interest rate).

Unit-linked life insurance: Endowment policies can also be unit-linked, which means that the savings capital is wholly or partially invested in a fund. Offering higher potential returns, these products can boost your retirement income – but they come with greater risk. The tax advantages are the same.

Life insurance in the third pillar: You can take out life insurance either as a straightforward term insurance policy to cover death and/or disability, or term insurance combined with a savings element (endowment insurance). You insure a capital sum, which is paid out in the event of death (term insurance) or also when the policy expires (endowment insurance). You can also include cover for an annuity in the event of incapacity for work.
Both types can be taken out as a restricted (pillar 3a) or unrestricted (pillar 3b) pension plan.

Life insurance in the third pillar

Pillar 3a life insurance

Pillar 3b life insurance

Insurance products

Endowment insurance with
death and survival benefits

Term life insurance (death and/or
incapacity for work)

Life annuity

Endowment insurance with
death and survival benefits

Term life insurance (death and/or
incapacity for work)

Life annuity

Tax treatment

Contributions (up to the legal maximum amount)
are deductible from taxable income

Reduced tax rate applied to sum paid out,
separate to rest of income

Contributions are not tax-deductible

Wealth tax is payable on the
surrender value of insurance policies
during the policy period

Tax-free on payout

Contributions/premiums

Max. CHF 6,826 for employees covered by company pension plans

Max. CHF 34,128 for self-employed persons

Can be freely chosen

Nomination of beneficiary

In accordance with inheritance law

Can be chosen freely,
taking statutory entitlements
into consideration

Availability (term)

Can be withdrawn at the earliest 5 years before and at the latest 5 years after statutory retirement age as defined by Old-Age and Survivors’ Insurance legislation (AHV)

Can be freely chosen

Advance withdrawal

To finance owner-occupied residential property

If the policyholder draws a full disability pension

To purchase additional second-pillar pension benefits

If the policyholder becomes self-employed

If the policyholder leaves Switzerland (emigrates)

No restrictions

Available to

All employees and self-employed persons liable to pay tax in Switzerland

All persons over the age of 18

The range of life insurance products available is very varied and complex. To find the solution that is best tailored to your particular needs, you need an in-depth analysis of your requirements. Arrange a consultation with a pension expert at our partner service Optimatis for free no-obligation advice. They will then take care of everything, leaving you to reach a final decision at your leisure.